SoftBank sees volatility after record profits

SoftBank has seen a big turnround with its tech bets over the past year, with the conglomerate today reporting record full-year profits for a Japanese company of ¥5tn ($46bn).

While it has suffered a bad press and big headlines for its messy involvement in investments like WeWork and the collapsed Greensill Capital, there have been quieter successes and a major boost from the intense investor interest in tech stocks and IPOs.

As Kana Inagaki in Tokyo reports, profits for the year ending March 30 were helped by a $2.7bn investment in South Korea’s Coupang being turned into a $28bn stake after the ecommerce company went public.

Clearly, SoftBank has been timing it right in pushing for IPOs and choosing when to sell down its stakes, but that could get harder.

In its current financial year, a tech sell-off that continued today means Coupang’s valuation, which at one point reached $118bn, has nearly halved to $60bn, while its Uber shares have fallen more than 15 per cent since the end of March. “We believe [the market] volatility is here to stay and our view is that we need to have a very disciplined strategy for monetisation,” a person close to SoftBank’s Vision Fund said.

SoftBank’s founder Masayoshi Son told a press conference on Wednesday: “We can’t be too proud since a series of coincidences led to this result. There were many failed investments such as WeWork, Greensill and Katerra. But once we have achieved it once, I’m not going to let this end as a one-off.”

Lex says the Vision Fund investment unit’s net asset value has grown $36bn from the previous year to $236bn and it is no longer as dependent on Alibaba, which has gone from being worth 60 per cent of the portfolio to 43 per cent. Yet SoftBank shares falling 3.5 per cent on Wednesday reflect concern that most of its profits remain unrealised.

This week’s #techAsia newsletter points out SoftBank-backed Asian companies going public could help it avoid this being a one-off.
Grab, the Singapore-based “super app”, is planning to go public on Nasdaq after completing a $40bn Spac merger. Chinese ride-hailing group Didi Chuxing, is preparing an IPO in the US that looks set to value the company at $70bn-$100bn.

SoftBank is also still interested in listed companies, with a $730m investment in the UK ecommerce group THG this week. Check out our analysis of the role played by Akshay Naheta, who runs SB Northstar, a unit of SoftBank that Son set up last year to manage its investments in public equities.

The Internet of (Five) Things

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3. Samsung to stave off chip competition
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4. EBay makes bid for financial services
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5. Why you should show alarm at emotion recognition tech
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Tech tools — Vive Pro 2

HTC has just unveiled the next version of its VR headset, but the Vive Pro 2 is still priced far above where it needs to be to have mass-market appeal. It boasts a 5K display (2,448 x 2,448 pixels), improved sound and a more comfortable experience. The headset works with Windows 10 PCs and can be pre-ordered now for £719, with delivery at the end of June. The Verge has taken a first look.